Introduction to Consumer Behavior

Week 1
 What is consumer behavior
Consumer behavior: the study of the processes involved when
individuals or groups select, purchase, use, or dispose of products,
services, ideas, or experiences to satisfy needs and desires.
Why is consumer behavior important
Studying consumer behavior is important because this way marketers can understand
what influences consumers’ buying decisions. By understanding how consumers decide
on a product they can fill in the gap in the market and identify the products that are
needed and the products that are obsolete.

Studying consumer behaviour also helps marketers decide how to present

their products in a way that generates maximum impact on consumers.
Understanding consumer buying behaviour is the key secret to reaching and
engaging your clients, and convert them to purchase from you.
What is the difference between consumer, customer and client.
Consumers are for products while
Customers are for brands
For example, We all are consumers of cell phones, but customers
of different companies/brands like Nokia, Samsung, Q-Mobile etc.
Client is a customer for whom the company makes an effort to
build long-term relationship (relationship marketing) primarily
used in service industries
Stages in Consumption Process
Types of consumer behavior

Complex buying behavior

This type of behavior is encountered when consumers are buying an expensive,
infrequently bought product. They are highly involved in the purchase process
and consumers’ research before committing to invest. Imagine buying a house or a car;
these are an example of a complex buying behavior.
Types of consumer behavior

Dissonance-reducing buying behavior

The consumer is highly involved in the purchase process but has difficulties determining
the differences between brands. ‘Dissonance’ can occur when the consumer worries that
they will regret their choice.

Imagine you are buying a lawnmower. You will choose one based on price and
convenience, but after the purchase you will seek confirmation that you’ve made the
right choice.
Types of consumer behavior

Habitual buying behavior

Habitual purchases are characterized by the fact that the consumer has very little
involvement in the product or brand category. Imagine grocery shopping: you go to the
store and buy your preferred type of bread. You are exhibiting a habitual pattern, not
strong brand
loyalty.
Types of consumer behavior

Variety seeking behavior

In this situation, a consumer purchases a different product not because they
weren’t satisfied with the previous one, but because they seek variety.
Like when you are trying out new shower gel scents.
Types of consumer behavior

Variety seeking behavior

In this situation, a consumer purchases a different product not because they
weren’t satisfied with the previous one, but because they seek variety.
Like when you are trying out new shower gel scents.
What affects consumer behavior

1. Marketing campaigns
2. Economic conditions
3. Personal preferences
4. Group influence
5. Purchasing power
Consumer behavior and marketing strategy
Consumer behavior is concerned with all aspects and activities of
purchasing behavior as well as all people involved in purchasing decisions.

It is one of the most important aspects of marketing. Here are some effects
that the study of consumer behavior is having on marketing strategies.
Consumer psychographics
Similar to demographics, psychographics is a way to find out more about your customer.
It is a type of methodology that includes the study and classification of consumers
according to psychological criteria and their attributes, such as attitudes, aspirations,
opinions, interests, values, lifestyles, and personalities. There are two main ways that the
study of consumer activities, interests, and opinions can help affect marketing strategies.

First, understanding consumer psychographics can affect the way in which marketers

choose to communicate with customers. Second, it can change the way marketers build
messages that are meant to capitalize on or influence consumers with already existing
opinions.
Market sensing processes
This refers to a set of processes and research techniques that help marketers and
management teams better understand the external market.

These processes help businesses get a competitive advantage because they have a deeper
knowledge of consumers and purport to predict, or “sense,” which way the market will
swing in the future. It is not so much consumer behavior as it is predictive consumer
behavior.
Supply and demand
Supply and demand are one of the most basic models in economics and consists of the
proportion between the amount of supply for something and the amount of demand for
that which is being supplied.
Consumer behavior greatly affects supply and demand.
There are two different types of supply and demand situations that affect the types of
marketing strategies that are deployed for a product or service. The first situation is when
there is an abundant supply and demand is scarce, and the second situation is when there
are scarce supply and the demand it is great.

Assessing these two comparative ratios is extremely useful for marketers to gain insight
into consumer behavior and how they should market their products
Sales forecasts
Sales forecasts are used to estimate the expected amount of sales for a specific market
throughout a specific period of time. Sales forecasts cannot be higher than the potential
of
the market and use different methods such as quantitative and qualitative forecasts.
Quantitative forecasts make their predictions based on past sales, while qualitative
forecasts predict the sales of a product or service based on the opinions of experts in the
field.

Businesses can study the past behavior of consumers in order to determine what should
be contained in sales forecasts.
Internet research
Many companies are now using the internet to carry out a lot of research on consumer
behavior, including the consumer’s activity on the Web.

The findings help businesses figure out the most appealing product attributes, best sales
promotions, the right price, the optimal market conditions, and the best places in which to
sell.

The Internet is a very powerful yet cost-effective tool for marketing research.

Its flexibility regarding consumers’ shifting demands and ability to pinpoint specific
target areas make it very useful.
Marketers need to understand the wants and needs of different
consumer segments.
Marketers need to develop effective retention strategies
Customer segmentation can help you develop more focused strategies to retain
customers. For example, you may want to identify your top-paying customers and
create exclusive offers for them. Or you may even want to re-engage people who
haven’t purchased in a while. The possibilities are endless.
Marketers provide superior customer experience
You can solve this problem by using customer segmentation. You can create various
customer segments based on individual preferences and tailor your
communication accordingly.

Simple things like personalized product recommendations, discounts, or reminders

about their wish lists can make a big difference.
The Most Common Types of
Customer
Segmentation
What is Market segmentation

Market segmentation is the process of dividing a target market into smaller,

more defined categories. It segments customers and audiences into groups
that share similar characteristics such as demographics, interests, needs, or
location.
 Eight benefits of segmentation
Create strong Identify the most Attract
effective
Design hyper-
marketing (and convert)
marketing tactics targeted ads
message quality leads

Differentiate your Identify niche

brand from
Build deeper
market Stay focused
competitors customer affinity
opportunities
 Market
segmentation
Thank you